cs.CLAug 17, 2026

Semantic Bandits: In-Context Exploration-Exploitation is Biased by Semantic Priors

Authors: David Eric Austin, Kaheer Suleman, Jackie Chi Kit Cheung

Organizations: McGill University · Mila – Quebec AI Institute · Skyfall AI · Canada CIFAR AI Chair, Mila

Abstract

Large language models (LLMs) are increasingly deployed as decision-making agents in settings that require sophisticated environmental exploration. However, existing work has raised questions about how LLMs actually balance exploration and exploitation. Unlike classical agents, LLM agents engage with tasks through natural language, exposing them to semantic information with no formal counterpart in the task structure. We introduce the semantic bandit, an extension of the multi-armed bandit setting that explicitly considers the textual labels assigned to actions, and use it to study how semantic priors --- inductive biases arising from associations between language and expected reward learned during pre-training, shape LLM exploration behaviour. We find that semantically informative action labels reduce exploration in favour of exploitation, improving performance when aligned with the reward structure and severely degrading it when misaligned. We further find that negative rewards trigger substantially more exploration than equivalent positive rewards, consistent with an expected-scale bias induced by reward conventions common in pre-training data. Overall, we argue that the use of language to define the environment and rewards introduces unavoidable biases derived from the fact that the model is trained on word co-occurence, with implications for the reliability and robustness of LLM agents in real-world decision-making settings.

Figures & tables

Appendix figures & tables29 assets

Supplementary material from the paper’s appendix.

Appendix

Explore similar work

Mar 8, 2026

Rigidity in LLM Bandits with Implications for Human-AI Dyads

We test whether LLMs show robust decision biases. Treating models as participants in two-arm bandits, we ran 20000 trials per condition across four decoding configurations. Under symmetric rewards, models amplified positional order into stubborn one-arm policies. Under asymmetric rewards, they exploited rigidly yet underperformed an oracle and rarely re-checked. The observed patterns were consistent across manipulations of temperature and top-p, with top-k held at the provider default, indicating that the qualitative behaviours are robust to the two decoding knobs typically available to practitioners. Crucially, moving beyond descriptive metrics to computational modelling, a hierarchical Rescorla-Wagner-softmax fit revealed the underlying strategies: low learning rates and very high inverse temperatures, which together explain both noise-to-bias amplification and rigid exploitation. These results position minimal bandits as a tractable probe of LLM decision tendencies and motivate hypotheses about how such biases could shape human-AI interaction.
Apr 7, 2026

When Do We Need LLMs? A Diagnostic for Language-Driven Bandits

We study Contextual Multi-Armed Bandits (CMABs) for non-episodic decision-making problems where the context includes both textual and numerical information (e.g., recommendation systems, dynamic portfolio adjustments, offer selection; all frequent problems in finance). While Large Language Models (LLMs) are increasingly applied to these settings, utilizing LLMs for reasoning at every decision step is computationally expensive, and uncertainty estimates are difficult to obtain. To address this, we introduce LLMP-UCB, a bandit algorithm that derives uncertainty estimates from LLMs via repeated inference. However, our experiments demonstrate that lightweight numerical bandits operating on text embeddings (dense or Matryoshka) match or exceed the accuracy of LLM-based solutions at a fraction of their cost. We further show that embedding dimensionality is a practical lever on the exploration-exploitation balance, enabling cost-performance tradeoffs without prompt complexity. Finally, to guide practitioners, we propose a geometric diagnostic based on the arms' embeddings to decide when to use LLM-driven reasoning versus a lightweight numerical bandit. Our results provide a principled deployment framework for cost-effective, uncertainty-aware decision systems with broad applicability across AI use cases.
Apr 19, 2026

DORA Explorer: Improving the Exploration Ability of LLMs Without Training

Despite the rapid progress, LLMs for sequential decision-making (i.e., LLM agents) still struggle to produce diverse outputs. This leads to insufficient exploration, convergence to sub-optimal solutions, and becoming stuck in loops. Such limitations can be problematic in environments that require active exploration to gather information and make decisions. Sampling methods such as temperature scaling introduce token-level randomness but fail to produce enough diversity at the sequence level. We analyze LLM exploration in the classic Multi-Armed Bandit (MAB) setting and the Text Adventure Learning Environment Suite (TALES). We find that current decoding strategies and prompting methods like Chain-of-Thought and Tree-of-Thought are insufficient for robust exploration. To address this, we introduce DORA Explorer (Diversity-Oriented Ranking of Actions), a training-free framework for improving exploration in LLM agents. DORA generates diverse action candidates, scores them using token log-probabilities, and selects actions using a tunable exploration parameter. DORA achieves UCB-competitive performance on MAB and consistent gains across TALES, e.g., improving Qwen2.5-7B's performance from 29.2% to 45.5% in TextWorld. Our project is available at: https://dora-explore.github.io/.